Foreign direct investments and "green" consumers

In this paper, we focus on the relationship between foreign direct investment, environmental norms and consumers' ecological preferences. This empirical study is based on previous theoretical models showing that weak unilateral environmental regulations create pollution havens attracting FDIs, which leads to even more pollution. However, our first non parametrical estimations on data coming from both developed and developing countries show that outward FDIs decrease with local consumers' “greenness†. This is further confirmed by a deeper analysis, showing that home and host consumers' “greenness†has a very strong negative impact on outward FDIs. The results also show that consumers' “greenness†may act as a counterweight to the pollution haven effect.